Collections & Garnishment Law
In every business, there are inevitable accounts do not get paid; but, it does not mean you have to write off the debt. I will help you recover it.
The Fair Debt Collection Practices Act (FDCPA) governs how third party creditors (collection agencies) collect bad debt. Recently, the Consumer Financial Protection Bureau (CFPB) has proposed rules which would apply the FDCPA to businesses collecting their own debt. Even before the rules have been adopted, the CFPB brought an enforcement action against a business collecting its own debt in violation of the FDCPA. Even if the proposed rules have not been officially adopted, the CFPB considers first party creditors subject to the FDCPA.
So what does that mean to you regarding collecting your own bad debt? You need to comply with the FDCPA collection rules. A sample of the restrictions under FDCPA are as follows:
- Do not call a debtor at “unusual times” for the debtor.
- If the debtor asks to stop being called, stop calling.
- Do not talk to others, aside from the debtor or debtor’s attorney, about the debt without the permission of the debtor.
- Do not send post cards about the debt or mention the debt on the envelop sent to the debtor.
Garnishments only occur once you have a judgement against a person or company. Once a judgement (even a default judgment) has been entered, you can start the garnishment process. Wages and checking accounts are the simplest form of garnishment; however, liens can also be place on property to secure payment.
Replevin is a unique collections method. Replevin comes in to play when a tangible good has been used as security and cannot be repossessed using self-help repossession because the good is hidden, locked inside of a building, or otherwise inaccessible. The action allows the creditor/secured party to obtain an order of the court without the debtor being present*. The order is then given to the bailiff or sheriff who goes to where the property is being stored and ceases the property It allows the creditor to have immediate access to the secured property, without the threat of any further damages. After the property is secured, a hearing may be scheduled whereby the debtor can argue why his or she should be entitled to the property. If the debtor does not elect to have a hearing, the lawsuit continues to operate like a normal collections lawsuit.
*In Ohio, a bond must be posted for two times the value of the good in order to obtain the good without giving notice to the debtor.